Akiş REIT 1Q18 Performance Presentation May 2018

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1 Akiş REIT 1Q18 Performance Presentation May

2 Breaking News Akiş REIT has been included in FTSE EPRA/NAREIT Global Emerging Markets Index as of 19 March On 10/04/2018, European Bank for Reconstruction and Development (EBRD) invested c.tl102mn (US$25.2mn equivalent) to Akiş REIT along with some other individual/institutional investors during the Accelerated Book Building Process to sell 17.39% shares bought back during the merger process with SAF REIT. This is the first time the EBRD is investing in a publicly-listed real estate company in Turkey and it is also the Bank s first equity capital market transaction in the country. The EBRD acted as an anchor investor and helped attract TL 243,679,050, or equivalent of US$ 60 million, from domestic and foreign investors with demand for shares exceeding the offering. This transaction will result in c. TL50mn other income in the statutory tax financials. EBRD s investment will help to support sustainable retail and residential developments and will result in concrete strategic action plan that involves the following; EBRD has obtained a letter of undertaking from its shareholders holding shares corresponding to 50.75% of its share capital to ensure that: Current dividend policy will be amended not later than 1 April 2019 so that, in respect of each of the Financial Years, in an aggregate amount at least equal to the lower of (i) an amount representing 100% of the Company's distributable profits for the relevant Financial Year and (ii) the Turkish Lira equivalent of USD 20,000, will be declared and paid to shareholders The investment will support the development of environmentally friendly and sustainable real estate projects in retail and residential sectors as follows; -> Akiş REIT is aiming to achieve a minimum LEED Silver certification for the Beykoz residential development which will be financed with the proceeds of the Bank s investment. 2

3 Details of the Share Sales Current Shareholder Structure Percentage of Shares Sold by type of investor Others; 29,03% Ali Raif Dinçkök; 24,19% Local Individual/Institutional; 49,29% EBRD; 42,31% Raif Ali Dinçkök; 6,56% Akkök Holding A.Ş.; 14,66% European Bank for Reconstruction and Development; 7,36% Emniyet Ticaret ve Sanayi A.Ş. ; 8,99% Nilüfer Çiftçi; 9,21% Foreign Funds; 2,59% Local Funds/Brokerage Houses; 5,82% 3

4 Breakdown of Portfolio 61,9% 23,4% 4,8% 0,7% 9,2% Akasya Shopping Center Akbati Shopping Center Suadiye Beymen Other Assets Inventories 4

5 Turkey Shopping Mall Market Overview Number of Shopping Malls Shopping Malls Turnover (TLbn) 15.4% 119,2 14.8% 103,8 137,5 9.4% 150, / E 2019E Breakdown of Investments by Investor (sqm) ; Foreign; 23,1% ; Mix; 4,0% E 2019E Competition is getting more intense every year Planned supply and demand dynamics should be more carefully analysed than ever Shopping Malls are not just malls but living spaces where technology and social media intersect Location; closeness to customer is more important than ever İstanbul is home to c.40% of Gross Leasable Area ; Local; 72,9% Source: Akasya Shopping Mall still holds its title as the only almost fully let A+ shopping mall status on the Anatolian side of Istanbul whereas Akbatı Shopping Mall is still the very first and only attraction centre in its hinterland 5

6 Overview of Our Commercial Portfolio Akasya Commercial Center Akbatı Commercial Center Suadiye Beymen Opening Date 2014 Number of Shops 261 Opening Date 2011 Number of Shops 173 Opening Date 2017 Number of Shops 1 Gross Leasable Area (sqm) Gross Leasable Area (sqm) Gross Leasable Area (sqm) c Occupancy Rate 98% Occupancy Rate 99% Occupancy Rate 100% Rent per sqm US$66/month Rent per sqm US$32/month Rent per sqm US$60/month Rent for last Full Year US$57mn Rent for last Full Year US$23mn Rent for last Full Year n.a. International Awards 91 International Awards 87 International Awards - 6

7 Akasya Shopping Mall 7

8 Akasya Shopping Mall Akasya Shopping Mall turnover rose by c.16% in 1Q18 (YoY) Income breakdown 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 1Q15 1Q16 1Q17 1Q18 Rental Revenue Revenue on Turnover Turnover Top-Up Revenue Other Revenue Occupancy Ratio ~ Near All Times High 98,5% Average Store Tenure (month) 97,3% 96,4% 96,5% 96,0% 95,9% 96,7% 96,4% 95,9% 97,7% 97,9% 8,46 10,85 10,71 10,44 95,4% 95,3% 3,96 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q (9M) (4M) 8

9 Akasya Shopping Mall Store Mix by Size (sqm) 5,2% 5,7% 5,7% 5,7% 21,0% 20,8% 20,5% 20,1% 14,9% 14,3% 14,0% 14,3% 7,5% 7,5% 7,2% 9,1% 49,5% 49,7% 50,8% 49,0% 1Q15 1Q16 1Q17 1Q18 1,000 10, ,

10 Akasya Shopping Mall Income yield Akasya Shopping Mall (US$mn) Q18 Revenue 58,4 58,9 57,5 15,5 NOI 44,5 45,0 45,3 12,7 EBITDA 45,5 45,9 46,0 12,9 Latest Appraisal Value 603,8 627,6 631,0 631,0 Yield 7,54% 7,31% 7,30% 7,58% Akasya Shopping Mall posted significant turnover increase (c.16%) YoY despite flat # of visitors Yet, there has been slight increase in car entrance figure Thus, core Akasya visitors remained almost unchanged Net Operational Margin stood out at c.82% vs. c.77% average over the last three years due mainly to; Effective cost management Rise in complimentary income 10

11 Akbatı Shopping Mall 11

12 Akbatı Shopping Mall Akbatı Shopping Mall turnover rose by c.20% in 1Q18 (YoY) Income breakdown 100% 1Q15 1Q16 1Q17 1Q18 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Rental Revenue Revenue on Turnover Turnover Top-Up Revenue Other Revenue Occupancy Ratio ~ Near All Times High 98,5% 98,3% 98,0% 97,6% 97,6% 98,3% 98,6% 98,4% 97,9% 98,0% 99,1% 98,7% Average Store Tenure (month) 11,22 10,60 10,85 10,48 10,99 10,64 96,3% 3,77 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q (4M) 12

13 Akbatı Shopping Mall Store Mix by Size 5,6% 5,8% 4,8% 5,1% 15,2% 14,4% 13,6% 13,7% 9,0% 10,0% 10,2% 10,7% 10,6% 11,4% 11,2% 11,9% 58,3% 57,2% 58,7% 57,3% 1Q15 1Q16 1Q17 1Q18 1,000 10, ,

14 Akbatı Shopping Mall Income yield Akbatı Shopping Mall (US$mn) Q18 Revenue 23,8 24,1 23,2 6,1 NOI 16,5 16,7 16,9 4,4 EBITDA 16,6 16,8 17,1 4,4 Latest Appraisal Value 267,4 253,5 239,4 239,4 Yield 6,22% 6,64% 7,13% 7,37% Akbatı Shopping Mall posted significant turnover increase (c.20%) YoY coupled with c.3% rise in the # of visitors due to; Akbatı s unique shopping mall status in its hinterland Net Operational Margin stood out at c.73% vs. c.71% average over the last three years due mainly to; Effective cost management Rise in complimentary income 14

15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Our Portfolio vs. Market Turnover Change YoY 40% 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% AYD Akasya Akbatı Visitors Change YoY 25% 20% 15% 10% 5% 0% -5% -10% AYD Akasya Akbatı 15

16 High Street Retail Projects We are developing four retail oriented units that will fit the texture of the city and reflect the company s vision; in Erenköy, Caddebostan and Suadiye, located on Bağdat Street, one of the most coveted shopping streets in Istanbul with a total investment value of US$185mn (US$170mn realized). Expected Opening Dates: Exp. Yearly Rental Income: USD8.5mn Gross Leasable Area: m2 Gross Sellable Area: m2 Expected Sales Revenue: USD27mn Our Track Record on High Street Retail Opened in September 2017, Suadiye Beymen adds to the prestige of Bağdat Street with its spectacular interior and exterior architecture 15-year lease contract with a well known retailer: Beymen USD3.6mn rental income per annum (7.37% yield based on 2017YE appraisal value) 16

17 Beykoz Projects We plan on developing a residential/commercial project in Beykoz, one the most upmarket districts in Istanbul, seizing the opportunity of supply deficit in the region. The expected date for the project kick-off is Project Kick-Off Date: 2019 Project Area: m2 Total Investment Value: TL230mn (TL85mn realized) Expected IRR: 25% (in TL terms) Expected Project Income: TL350mn Investment Rationale: Limited modern residential supply in the area Most of the available land plot is protected area Residential density one the lowest of Istanbul Looking over the forest and the sea New and upcoming infrastructure will make commuting easier 17

18 Financial Performance Overview Net Loss of 1Q18 is mainly due to negative impact of FX volatility c.tl182mn stem from one-off merger profit 203,1 EBITDA margin improved thanks to c.37%* rise in store rent revenues and significant jump in other revenues coupled with a good cost management 73,5% 75,8% 65,9% 66,9% 60,3% 92,1 43,6% (TLmn) 18,2 7,9 3,3 65,9 39,7 61,6 1Q16 1Q17 1Q18-18,7 1Q16 1Q17 1Q18 Revenue EBITDA Net Income Gross margin EBITDA margin EBITDA/Interest Expense 1,5 1,9 1,9 Average Debt Maturity has fallen significantly due to hefty previously long term payments being now recorded as short term. We target to lengthen average debt maturity in ,5 2,5 1,8 1Q16 1Q17 1Q18 1Q16 1Q17 1Q18 *unadjusted for last year s merger, adjusted figure is 20% 18

19 Akiş REIT Share Summary 4,00 3,50 3,00 2,50 2,00 1,50 1,00 0,50 0, % market capitalization return YoY in 1Q18 closing vs. 1Q17 closing 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Opening Low High Closing Average % YoY increase in average daily volume to c.tl1.5mn vs. c.tl1.2mn Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Low High Average 19

20 Communication Ozan Hançer Director Strategic Planning, Business Development and Investor Relations Telephone: Sercan Uzun, CFA Assistant Manager Investor Relations, Strategic Planning and Business Development Telephone: /53544 Disclosure: This presentation has been prepared in order to inform investors. Since the presentation has been prepared regarding the previous period, the data in it may not reflect the current situation. The estimations regarding projects are given in accordance with feasibility studies prepared on basis of certain assumptions and may be updated any time. Akiş REIT management and employees can not be held responsible for any damages or losses arising from the direct/indirect use of content in this presentation. For more information : investor.relations@akisgyo.com 20